Home Reversion Plans
A home reversion plan is a type of equity release where you sell all or part of your home to a provider in return for money, while keeping the right to live in the property.
Unlike a lifetime mortgage, a home reversion plan is not a loan secured against your home. You are selling a share of the property. This means there is usually no interest to roll up, but you no longer own the full property.
A home reversion plan can affect your estate, inheritance, tax position, benefits and future choices. It should only be considered after qualified equity release advice.
Home Reversion Plans Explained
A home reversion plan allows eligible homeowners to release money from their property by selling part or all of the home to a reversion provider.
In return, you may receive:
- A tax-free lump sum
- Regular payments
- A combination of both, depending on the plan available
You usually retain the right to live in your home rent-free for the rest of your life, or until you move permanently into long-term care. When the property is eventually sold, the provider receives the percentage share of the property that it owns.
This page is part of the wider equity release journey. It focuses only on home reversion plans, so you can understand how this option differs from other later-life property finance choices.
How Does a Home Reversion Plan Work?
With a home reversion plan, you sell a percentage of your home to a provider. The provider then owns that share of the property.
For example, you may sell 30%, 50% or 100% of your home, depending on the plan, your age, the property, your needs and the provider’s criteria.
You continue living in the property under the terms of the agreement. When the property is sold, usually after death or a move into long-term care, the provider receives its agreed share of the sale proceeds.
If you sold 40% of your home, the provider would usually receive 40% of the future sale value. Your estate would usually receive the remaining 60%, after any other costs or obligations are dealt with.
The amount offered for the share you sell is usually less than the full market value of that share. This is because the provider may have to wait many years before receiving its money back from the sale of the property.
Home Reversion Plan vs Lifetime Mortgage
A home reversion plan and a lifetime mortgage can both allow you to access money from your home, but they work in different ways.
| Feature | Home reversion plan | Lifetime mortgage |
|---|---|---|
| Ownership | You sell part or all of your home | You usually keep ownership of your home |
| Interest | Usually no loan interest to roll up | Interest is usually added unless payments are made |
| Repayment | Provider receives its property share when sold | Loan and interest usually repaid when the property is sold |
| Inheritance | Your estate keeps the unsold share | Your estate keeps value left after loan repayment |
| Property value changes | Provider benefits from the share it owns | You usually keep ownership, but debt may grow |
| Suitability | May suit specific circumstances only | More common form of equity release |
If you want to understand the more common type of equity release, read our guide to lifetime mortgages.
Home Reversion Plans and Equity Release
Home reversion plans are one form of equity release.
The two main types of equity release are usually:
- Lifetime mortgages
- Home reversion plans
A lifetime mortgage allows you to borrow money secured against your home while you usually keep ownership of the property. Interest is usually added to the loan, although some plans may allow voluntary payments or interest payments.
A home reversion plan works differently. You are not borrowing against the home. You are selling part or all of it.
This difference matters because it affects ownership, inheritance, future property value and the options available to you later.
Who Might Consider a Home Reversion Plan?
A home reversion plan may be considered by homeowners who want to release money from their property without taking out a lifetime mortgage.
It may be relevant if you:
- Are exploring equity release options
- Want to stay in your home
- Are comfortable selling a share of your property
- Want to avoid interest rolling up on a lifetime mortgage
- Want to understand how releasing property wealth may affect your estate
- Have discussed your plans with family or beneficiaries
- Have received qualified advice
A home reversion plan is not suitable for everyone. The right option depends on your age, property value, health, family situation, future plans and attitude to inheritance.
What Can The Money Be Used For?
People may consider equity release for different reasons. These may include:
- Repaying an existing mortgage
- Making home improvements
- Supporting family members
- Adapting a property for later life
- Improving retirement income
- Paying for care-related changes
- Managing later-life financial planning
The reason for releasing money matters. An adviser should consider whether a home reversion plan is suitable, or whether another route could be more appropriate.
For broader options, you may also want to read about later life lending.
Is a Home Reversion Plan Right for You?
A home reversion plan may be worth discussing if you want to release money from your home and understand that you will be selling a share of the property.
Before deciding, it is important to ask:
- Do I want to keep full ownership of my home?
- How much of my property am I comfortable selling?
- How could this affect my estate?
- How could this affect my family or beneficiaries?
- Could a lifetime mortgage be more suitable?
- Could downsizing be a better option?
- Could a retirement interest-only mortgage or other later-life lending option work?
- Could this affect my means-tested benefits?
- What happens if I need to move home later?
- What happens if I move into long-term care?
The answer may depend on your full financial picture, not just the value of your home.
Key Risks of Home Reversion Plans
A home reversion plan is a major financial decision. It can have long-term effects on your home, family and estate.
Important risks include:
- You no longer own the full property
- The provider may benefit from future growth on the share it owns
- The amount you receive is usually less than the market value of the share sold
- Your estate and inheritance may be reduced
- You may have less flexibility if your circumstances change
- Moving home may depend on the plan terms and provider criteria
- It may affect means-tested benefits
- It may affect tax planning
- Buying back the share may be difficult or expensive
- It may not be suitable if you only need short-term borrowing
You should not enter a home reversion plan unless you fully understand the long-term impact.
Home Reversion Plans Explained
A home reversion plan can be useful in the right circumstances, but it is not the right choice for everyone.
If you are considering equity release, it is important to compare your options carefully and understand the long-term impact before proceeding.
Speak to an equity release adviser to discuss home reversion plans, lifetime mortgages and later-life lending options.
Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.
A lifetime mortgage is a loan secured against your home. To understand the features and risks, ask for a personalised illustration.
Equity release is not suitable for everyone. You should consider alternatives and seek qualified advice before making a decision.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
Home Reversion Plans FAQs
Is a home reversion plan the same as a lifetime mortgage?
No. A home reversion plan involves selling part or all of your home. A lifetime mortgage is a loan secured against your home, where you usually keep ownership of the property.
Do I still live in my home with a home reversion plan?
Usually, yes. You normally keep the right to live in the property under the terms of the agreement.
Do I still own my home?
You only own the share of the home that you have not sold. If you sell 40% of the property, the provider owns that 40% share.
Is there interest on a home reversion plan?
A home reversion plan is not normally structured as a loan, so there is usually no interest to roll up. The provider receives its agreed share when the property is sold.
Will a home reversion plan affect inheritance?
Yes, it can reduce the value of your estate because part or all of the home has been sold to the provider.
Can I move home after taking a home reversion plan?
This depends on the terms of the plan and provider criteria. You should ask about moving home before entering into any agreement.
Is a home reversion plan suitable for everyone?
No. It is a specialist form of equity release and should only be considered after advice, comparison with alternatives and a full review of your circumstances.
Should I speak to my family first?
You may wish to involve family or beneficiaries before making a decision, especially if inheritance or future care planning is important to you.
Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.
A lifetime mortgage is a loan secured against your home. To understand the features and risks, ask for a personalised illustration.
Equity release is not suitable for everyone. You should consider alternatives and seek qualified advice before making a decision.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.